Doom-and-Gloom Hasn't Hit the Containers Market

"The first half was a crackling good start to the year, so why all the worry? Container shipping volumes and profits rebounded — first half box handling increased 15, 20 and 19 percent, respectively, at the ports of Los Angeles, Long Beach and Charleston (see chart above). The resulting capacity shortages and skyrocketing rates triggered huge swings from loss to profit at container lines.

As Neptune Orient Lines’ Ron Widdows somewhat triumphantly commented on Aug. 6 in announcing a $100 million second quarter net profit versus a $146 million loss a year earlier (and a 53 percent increase in revenue), “The result for this latest quarter reflects significant progress as we turn around our performance from the economic downturn of 2009.”

And the market is holding. Whatever doom-and-gloom sentiment may exist, it hasn’t hit the container markets yet. Drewry Shipping Consultants’ Container Rate Benchmark for the trans-Pacific spot market soared 225 percent over the last year and backed off only imperceptibly in the last week after climbing steadily since March. It got a further boost in recent weeks from carriers’ apparent success in implementing a peak-season surcharge on import containers."

From the commentary "Doom and Gloom, Round 2" by Peter Tirschwell, senior PV for global strategy at UBM Global Trade, in the Journal of Commerce (subscription required).